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‘It Puts You Into a Process That Hugely Favors the Employer’ - CounterSpin interview with Celine McNicholas on forced arbitration
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Janine Jackson interviewed Celine McNicholas about forced arbitration for the May 31, 2019, episode of CounterSpin. This is a lightly edited transcript.
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Janine Jackson: Fast food workers winning a higher minimum wage. Public school teachers winningsmaller class sizes. Workers have had some remarkable victories recently.
At the same time, a new report from the Economic Policy Institute and the Center for Popular Democracy describes the disturbing rise of a particular constraint on workers’ voices and their power.
The press release for the report contains a quote that presents the problem clearly. Brenda Rojas, a college student in Oregon, says:
While working at Buffalo Wild Wings, my coworkers and I experienced wage theft regularly, and worked in an environment of constant sexual harassment. Complaining about these working conditions was pointless, because we had signed a forced arbitration clause, and the company knew that we couldn’t fight back in court. None of us understood the forced arbitration language when we signed our new-hire paperwork. But we were told that if we did not “check all the boxes,” we would not be hired. How can students like me build a brighter economic future when our employers are allowed to rip us off?
How indeed?
But there is resistance, too, to be found in the report, called Unchecked Corporate Power: Forced Arbitration, the Enforcement Crisis and How Workers Are Fighting Back.
We’re joined now by one of the report’s authors. Celine McNicholas is director of government affairs and labor counsel at the Economic Policy Institute. She joins us now by phone from Washington, DC. Welcome to CounterSpin, Celine McNicholas.
Celine McNicholas: Thank you for having me.
JJ: First of all, the report was released, for a reason, on the one-year anniversary of a Supreme Court decision. What was the significance of Epic Systems v. Lewis? How did that ruling spur this report?
CM: Epic Systems essentially codified the problem that you just revealed in the quote that you read, that workers are increasingly being required to sign away their right to sue when their employment rights are violated by their employer.
And Epic Systems essentially green-lighted employers embracing that practice, and unfortunately, going into the decision, the majority of workers were already facing the threat of this. And we now know that employers are increasingly embracing it since the decision. So a year out, we’re seeing this more and more.
JJ: Well, we talk, in media and elsewhere, about the labor “market,” as though people were mobile economic actors who can make informed choices about where to work. So if you don’t want to sign away your right to a class action lawsuit, the unspoken thinking goes, don’t take a job that requires it.
We should take issue with that idea, and, obviously, people have never been identically situated with regard to choices.
But your report makes it clear that in the private sector, in the nonunion private sector, not signing these things is increasingly just not an option. And it’s not just college students and their first jobs.
CM: That’s exactly right. And I think you hit on the fundamental myth, right, that we’re all sort of free agents in this economy.
And I think it’s wonderfully encouraging that unemployment continues to decrease, and wages, for the first time in a long time, we’re actually experiencing some level of an uptick. But still, most working people feel lucky to have a job, and feel that they have very little leverage, in that initial negotiation with their employer for the terms and conditions of their work.
And so in practicality, we all know, we can all admit, that we signed the paperwork on the first day on the job—and we’re happy to be signing up for, potentially, if we’re lucky enough, healthcare, and all of the other tangential forms—but we also may be signing away this right, without even really realizing the implications of what we’ve been asked to sign as a condition of working there. And that’s a really troubling trend, because it applies across all employment rights.
JJ: These forced arbitration clauses that the report projects, by 2024, 80 percent of private-sector, nonunion workers will be covered by these forced arbitration clauses. Let’s spell it out: What is wrong with forced arbitration?
CM: So short answer is “everything.” We’ll go into detail here: So essentially, when you are forced to arbitrate a claim, an employment claim, I would argue, in particular, because we just talked about the fact that most workers, you have limited leverage on the job; the employer, if they’re not happy with you, they can fire you for any reason at all, just not a narrow set of prohibited reasons that are protected reasons under the law.
Let’s say you’re being sexually harassed in your workplace, but you’ve been forced to sign an arbitration agreement on that first day. That means that, if you’re not getting any kind of relief, you go to HR, you go to your supervisor, and he or she says, “OK, we’re going to help you resolve this, but we’re going to do it through arbitration, you have no right to sue us.”
That immediately limits your leverage. But it also puts you into a process that hugely favors that employer, because you’re going it alone, you’re using a system that they’re paying for, “they” being the employer. That disadvantages all workers.
JJ: You very specifically are prohibited from joining together with other folks in the workplace who are experiencing the same problems that you might be.
CM: Yes, because many of these waivers include what you just referenced, a class or collective action component. And that means that you are in this system, arbitration, which is this unequal, unfair system, because the employer is really the entity that is a repeat player; that means that they are more familiar with the arbitrators, they’re often giving them business. So there’s this implied injustice in the whole system itself.
But then, in addition to that, you’re doing this alone, you’re navigating as an individual worker. Whereas if you brought suit as a class or collective action, you would have a great deal more leverage.
JJ: And I understand that, mainly, what it does is just kind of discourage. It’s not even so much that workers lose when they go through this process; knowing that that’s their only option pretty much discourages them from taking action in the first place.
CM: I think that that’s exactly right. And it makes a lot of sense, if you think about it. Just think of how difficult in practicality it is to voice any kind of concern in your place of work. Figuring out who do you go to. Oftentimes, a supervisor may be, unfortunately, involved in the conduct that is violating the law.
And so you’re navigating an already difficult process, and then you’re being compelled to do so on your own. Most folks are not familiar with arbitrations; it sounds like an incredibly formal process. And it would not be incorrect if the employer says, “This is going to cost you money,” because oftentimes workers are absorbing some of the cost for the process itself. And in addition to that, they can say, “You’re going to be unlucky in this system, because we’ve navigated this a couple of times, and your fellow workers haven’t done very well in the process.” And as you point out, that is true.
So it’s not as advantageous. People do worse in the system than they do in court.
JJ: There are meant to be entities that are enforcing these workplace rules. Even if the sort of David vs. Goliath situation of individual workers is disadvantageous, there are protective entities, government agencies, that are meant to be looking out for them. The report also deals with problems in that enforcement area. What’s the problem or the concern there?
Celine McNicholas: “At the same time that many of us in our work are being asked to sign away our private right of action through this system of forced arbitration, we are also facing fewer and fewer cops on the beat in terms of public enforcement of those rights.”
CM: This is sort of a perfect storm, in my view, because what you’re seeing is decreased public enforcement; there are fewer and fewer public dollars being invested in enforcing workplace protections.
So at the same time that many of us in our work are being asked to sign away our private right of action through this system of forced arbitration, we are also facing fewer and fewer cops on the beat in terms of public enforcement of those rights. The Department of Labor’s, state departments of labor’s, budgetshave decreased , while the workforce has expanded, and that leaves all of us with less protection in the workplace, and also, combined with forced arbitration, it’s such an incredible advantage—which is where that ominous title of this report comes from—it is an incredible advantage to corporate employers at this point, because they are making enforcement of any means, whether private or public, something that the vast majority of the workforce is losing access to.
JJ: We have these laws, you know, we make these laws on wages, against wage theft or on workplace safety. And then it seems like with Epic, the Supreme Court is just kind of waiving them away.
I mean, it’s kind of a balance of powers question, too, isn’t it? It seems like a real lopsided power that the Court is exercising here.
CM: Absolutely. And, in my view, Congress needs to act on this to restore the rights that were hard-won protections when they were originally enacted. Title VII, the right that fundamentally you can’t be discriminated against, harassed in the workplace, that’s an enacted law, that’s an enacted protection. And, essentially, it has been made very difficult, if not impossible, for many, many workers in this country to access that right.
Congress needs to then restore the right and say, “Hey, Supreme Court, you’ve misinterpreted this, you’ve essentially made this something that is no longer enforceable for the vast majority of workers when we gave this protection to the US workforce. You’ve overstepped”—just as you said—“and now we want to correct you.”
And this is not the first time that something like this has happened, where Congress has had to come in and correct something that the Supreme Court has misinterpreted. And it is my hope that they will do so here, because this cuts across fundamental rights, like even being paid the minimum wage. It is more difficult to enforce those rights when you have a system of forced arbitration that the Supreme Court has essentially blessed at this point in time.
JJ: Let me just ask you, finally, about specifically the legislative moves that are underway. How do the Restoring Justice for Workers Act and the Forced Arbitration Injustice Repeal Act address this outrage? And what’s the status of those legislative pieces?
CM: Both bills that you just referenced would prohibit forced arbitration, and class and collective action waivers, in any kind of employment disputes, so workers could no longer be compelled, on their first day on the job, to sign away those rights.
And both bills are pending, both in the House and Senate. So they’ve been introduced. And I really encourage listeners to contact their representatives, and encourage them to insist on passage of those bills.
The Fair Labor Standards Act, the National Labor Relations Act, our health and safety protections, they’re only as meaningful as our ability to enforce them. And without the Restoring Justice for Workers Act or the Forced Arbitration Injustice Repeal Act, we are going to be increasingly unable to enforce those fundamental rights. So we really need Congress to act to restore them on our behalf.
JJ: We’ve been speaking with Celine McNicholas, director of government affairs and labor counsel at the Economic Policy Institute. You can find the report, Unchecked Corporate Power, on EPI’s website, EPI.org. Celine McNicholas, thank you so much for joining us this week on CounterSpin.
CM: Thank you for having me.
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